I started trading in the summer of 1987. A few months later, the bottom fell out and the market crashed. I had sold some longs and bought some puts before that Monday so basically broke even on the day of the 522 point crash. It was the decline in the week before the crash where I lost most of my money in that move.
The 1987 crash was worse than the recent 2008/2009 bear market. In 1987, all trades were over the telephone. No one could get through, busy, busy, busy. If a person got through, the clerks couldn't give a real price, because the bid and ask was moving so quickly. Market orders often got filled way off the last trade. Some got out anyway, with horrible fills that sometimes cost them an extra 10% on top of the 40% market decline.
In 1987, I thought the financial world was going to end and that the U. S. was in for another great depression.
Fast forward 22 years, and still I tend to be cautious, often overly cautious. Caution allows me to survive severe markets like we experienced last year. At times, caution has hindered me as well. As Popeye might say, "I am what I am," best to find trades that fit my cautious style and profit where I can.
Changing the subject, the stock market booms ahead. AAPL reports blow out earnings. Is there a top out there? Certainly there is. When will it occur? To be sarcastic, I called for a top seven weeks ago in late August at SPY 105 (now 109 and moving higher). To be less sarcastic, time may be up on Wednesday of this week. A blowoff market top with a glamor name like AAPL leading would be a classic top for an intermediate move.
Even if there is a correction, 15% down might be all that is in the cards. More than that would likely require a shift in sentiment, with a lot more little fish in the stock market net. Most of the little fish have been putting their money into bonds, not stocks.
Long GLD (2)
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